Over at City Journal California, Ed Ring describes in nauseating detail the real costs of public-employee pensions in the Golden State.
"California has 1.85 million state and local government employees," Ring observes. "Using an average career of 30 years and an average retirement of 20 years, the Golden State is on track to see 1.25 million retired state and local workers collecting, on average, $60,000 per year in retirement pension payments. That's $75 billion per year and growing. Should taxpayers, the vast majority of whom can expect Social Security benefits of no more than $15,000 a year on average, really be expected to fund those retirements? Will they do so willingly? Not likely."
Some commenters, however, aren't convinced.
"Why do we blame the unions for accepting benefits given to them by politicians who, basically, found it expedient to buy their votes and let the next guy worry about paying the bills?" asks reader Paul Friedman. "If you want to hold someone accountable, it's management/government that should be scrutinized and skewered, not the unions."
As the cliché goes, it takes two to tango.
Truth is, many of the people in government who were responsible for making this mess -- the elected officials -- are either out of office or have moved on to something else. California, of course, has term limits. Most of the legislators who voted in 1999 to radically expand the state's public employee pension obligations are long gone. Some of them, however, are in Congress. Current elected officials have a duty and an obligation to make right their predecessors' poor policy decisions.
Adds reader "See Saw": "If all of the private sector detractors would just stand back, and let the public sector pricipals (sic) solve their respective, pension sustainability problems, things will smooth out, in the future."
We're hearing this more and more. Just as the stock market boom in the 1990s made the expansion of pension benefits possible, an eventual economic recovery and new market growth will help the pension funds grow their way out of a $500 billion hole. But the buzz-killers at California's Little Hoover Commission demolished this claim earlier in the year: "Barring a miraculous market advance and sustained economic expansion, no government entity--especially at the local level--will be able to absorb the blow [from rising pensions] without severe cuts to services."
(For more in that vein, read Steve Malanga's harrowing account of the "Compensation Monster Devouring Cities" in the latest City Journal.)
Ring underscores the complexity of the problem when he observes that "simply reducing public-pension benefits won't solve California's budget woes all by itself. The base rates of pay for most government workers would need to shrink, too." At some point, Californians will need to make a choice about the kind of government they want and the government they need. What's obvious is the government they have right now isn't working.
One of the commenters quoted in this article said ..."Why do we blame the unions for accepting benefits given to them by politicians who, basically, found it expedient to buy their votes and let the next guy worry about paying the bills?" asks reader Paul Friedman. "If you want to hold someone accountable, it's management/government that should be scrutinized and skewered, not the unions."
To this commenter, I respond ... We (the Taxpayers) do not "blame" you, and you're correct that the "blame" and "accountability" rightfully belongs (primarily) with the politicians who approved these excessive pensions (in exchange for your Union's campaign contributions and election support).
However, it's the Plan Participants (the Civil Servants) that are reaping the monetary benefits of this largess and THAT'S WHERE we must go to reverse it...... to take it back from YOU.
If you don't like that, then perhaps YOU should sue these officials who promised pensions that they knew (or should have known) had little chance of ever being fully funded.
As Ed Ring says, what we have now isn't working. The following analysis of how out-of-wack Public Sector pensions are with Private Sector pensions and who pays for them. Read on:
So let’s cut to the chase …....
Private sector employers typically contribute 3%-8% of an employee’s cash pay towards retirement, yet the total cost (expressed as a level annual % of cash pay throughout one’s career) of Public Sector Defined Benefit pensions (for a 30-year employee retiring at age 55) ranges from 29% to 58% depending on the richness of the benefit formula (with safety workers generally at the highest end).
More specifically, for the noted formulas, the level annual %s of cash pay are as follows:
2% per year of service w/o COLA – 29%
2% per year of service with COLA – 39%
3% per year of service w/o COLA – 44%
3% per year of service with COLA – 58%
Even after deducting the typical employee contribution of about 5% of pay, that still leaves the employer (meaning TAXPAYERS) contributing 24% to 53% of pay. The middle of these %s is 38.5% vs 5.5% (the middle of the range of what Private Sector employers contribute) or SEVEN (yes SEVEN) times greater.
This is completely absurd, and the very modest “tweaking” at the edges by practically begging employees for a few more percent of pay contributions will NOT even begin solve the HUGE financial problem.
TOTAL COMPENSATION (Cash Pay plus Pensions plus Benefits) should be comparable in the Public and Private Sectors for similar jobs, and with Cash Pay in the Public Sector now AT LEAST equal to (if not greater) than that in the Private Sector, there is ZERO justification for greater Public Sector Pensions and Benefits .
Not for PAST service, but for FUTURE service, Public Sector pension accruals must immediately be brought FULLY down to the level of their Private Sector counterparts. Due to the huge reduction needed, the ONLY way to do this is to freeze the current defined benefit plans for CURRENT (yes CURRENT) workers, and switch everyone into a 401K-style Defined Contribution Plan with an employer contribution in the same 3%-8% range granted Private Sector workers.
Additionally, since Private Sector retirees rarely get any retiree healthcare subsidy before eligibility for Medicare at age 65, similar restrictions should apply to Public Sector retirees.
It’s TAXPAYERS’ money and Civil Servants are NOT more worthy of bigger pensions and better benefits.
Mr. Ring describes public pensions in nauseating detail....
I think it is quite nauseating that the news propagandists scapegoat the public employee unions, for the pension excesses, when the really big winners and beneficiares of these excesses, are the former administrators, City Managers, School Superintendents, and like-ilk, who are collecting yearly pensions in the $100,000-$300,000+ range. The facts are, that these big receivers were not represented by unions, while they were actively employed, and are not in unions now. That group is obviously part of the upper middle class and richer, while the majority of public sector workers fit into a demographic that would be considered lower, middle-class. Of course, you are not going to point out the glaring fact that these receivers, of the big pension dollars, lean more toward the Republican side, while the lower-income group, which is represented by the unions, leans more toward the Democrat side. Thus, you will just push on, and continue to finger-point, at the unions--you can't bring yourselves to tell the truth.
The $60,000 benefit that you mention as the average amount, for recent public retirees is the average, for a cherry-picked group, who each have 30-years, or more, service credit. The average length of service, for recent CalPERS miscellaneous retirees, is 20 years. The actual average retirement amount, for recent CalPERS retirees, if you total all of the retirees in one recent year, is less than $30,000.
Its no wonder, that the polls are showing the private sector citizens turning against the public workers. You editorial writers, and opinion columnists, have done a bang-up job.